British business calls for Brexit “ common sense”

LONDON: July 07, 2017. The UK Confederation of British Industry (CBI) says in order to protect jobs and trade flows the UK should remain in the Single Market and Customs Union until a final exit deal is concluded.

The CBI, which represents 190,000 businesses, is proposing UK and EU negotiators build a bridge from the end of the Article 50 process in March 2019 to the new deal, maximizing continuity for firms and avoiding what it describes as a damaging cliff-edge.

According to CBI director general Carolyn Fairbairn (left of picture), "this is not about whether we are leaving the EU, it is about how. Once the Article 50 clock strikes midnight on 29th March 2019 the UK will leave the EU.

"Our proposal is for a limited transition period paving our way to a new future. This common-sense approach would bring continuity to firms in the UK and the EU and protect investment today," she added.

CBI chief economist Rain Newton-Smith said if both sides fail to reach a deal by March 2019, the UK would face an average four percent tariff on its exports to the EU: "If this were applied to total UK goods exports to the EU, the increase in tariff costs would be between £4.5 and £6 billion pounds per year. That's 0.2 to 0.3 percent of GDP."

On the change in the cost of EU imports, the UK would be obliged to impose the same tariffs as from other WTO members, said Newton-Smith: "Overall, our estimates suggest the average Most Favored Nation tariff rate on UK imports from the EU would be around 5.7 percent. This would be an additional annual cost of £11- £13 billion pounds.

"That's around 0.6 - 0.7 percent of annual GDP. Business would have to choose how to deal with these costs. Whether to take the hit themselves or to pass them on to customers," she noted.

Fairbairn added: "Even with the greatest possible goodwill on both sides, it's impossible to imagine the detail will be clear by the end of March 2019. This is a time to be realistic.

"Our proposal is for the UK to seek to stay in the Single Market and the Customs Union until a final deal is in force. Firms tell us this feels like common sense. Because barrier free trade brings jobs, growth and well-being to all parts of the UK and elsewhere in Europe."

David Davis, Britain's minister currently responsible for managing his country's exit from the EU, has said that while there will be a three-year transitional period, under Article 50 the UK will exit the Customs Union and Single Market after March 2019. The continued uncertainty surrounding what happens next suggests a reason for the CBI intervention.